American International Group price target lowered to $91 at KBW

American International Group (AIG) reported second-quarter 2025 earnings that surpassed Wall Street expectations, yet several research firms, including KBW, Goldman Sachs, and Jefferies, subsequently lowered their price targets for the insurer. Analysts cited concerns over anticipated slower premium growth, higher core loss and expense ratios, and mixed underlying performance trends, despite AIG's reported expense ratio-driven underwriting improvements and robust capital return program, leading to varied outlooks on its future financial trajectory.

Analysis

American International Group (AIG) presents a mixed investment thesis following its second-quarter 2025 earnings report. While the company surpassed Wall Street expectations on both earnings per share and revenue, a chorus of research firms, including Keefe, Bruyette & Woods (KBW), Goldman Sachs, Jefferies, and CFRA, have lowered their 12-month price targets. The core of this bearish sentiment stems from concerns about the quality and sustainability of future earnings, rather than the reported quarter's outperformance. Analysts are flagging specific forward-looking headwinds, such as anticipated slower premium growth, pressures on the underlying loss ratio, and higher core expense ratios. For instance, CFRA noted the modest 3% increase in General Insurance written premiums as a point of concern. Despite these target reductions, ratings remain largely positive, with KBW maintaining an 'Outperform' and Jefferies and CFRA holding 'Buy' ratings. KBW's revised estimates encapsulate this complex outlook: they increased their 2025 EPS forecast to $6.60 on the back of the Q2 beat but simultaneously lowered their 2026 and 2027 EPS forecasts to $7.90 and $8.80, respectively. The bull case, as articulated by KBW, rests on AIG's strong capital return program, ongoing expense ratio improvements, and potential offsets from lower catastrophe losses, which are expected to drive stock outperformance over the longer term.

Key Decisions for Investors

• Investors should look beyond the headline Q2 earnings beat and focus on the underlying fundamentals that prompted multiple analyst price target reductions, particularly the core loss ratio and premium growth trajectory.
• Despite moderated price targets, the prevalence of 'Buy' and 'Outperform' ratings suggests analysts still see long-term value, making this a potential hold or a 'buy on weakness' for investors who can tolerate near-term headwinds on underlying trends.
• Monitor future earnings reports for evidence of the forecasted slowdown in premium growth and pressure on loss ratios, as these are the key risks highlighted by analysts, while simultaneously tracking the performance of the capital return program and net investment income as potential offsetting tailwinds.